X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2003

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    X   No         

Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). Yes   X   No       

At July 31, 2003, the latest practicable date for determination, 323,357,204 shares of common stock, without par value, of the registrant were outstanding.

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The accompanying notes are an integral part of the Consolidated Financial Statements.

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The accompanying notes are an integral part of the Consolidated Financial Statements.

⁽¹⁾ The Consolidated Balance Sheet at December 31, 2002 has been derived from the audited Consolidated Financial Statements at that date.

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The accompanying notes are an integral part of the Consolidated Financial Statements.

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Virginia Power is a regulated public utility that generates, transmits and distributes electricity within a 30,000-square-mile area in Virginia and northeastern North Carolina. Virginia Power sells electricity to approximately 2.2 million retail customers, including governmental agencies, and to wholesale customers such as rural electric cooperatives, municipalities, power marketers and other utilities. Virginia Power has trading relationships beyond its retail service territory and buys and sells wholesale electricity and natural gas off-system.

CNG operates in all phases of the natural gas business, explores for and produces gas and oil and provides a variety of energy marketing services. Its regulated retail gas distribution subsidiaries serve approximately 1.7 million residential, commercial and industrial gas sales and transportation customers in Ohio, Pennsylvania and West Virginia. Its interstate gas transmission pipeline system services each of its distribution subsidiaries, non-affiliated utilities and end-users in the Midwest, the Mid-Atlantic states and the Northeast. CNG's exploration and production operations are located in several major gas and oil producing basins in the lower 48 states, including the outer continental shelf and deep-water areas of the Gulf of Mexico.

DEI is involved in merchant generation, energy trading and marketing and natural gas and oil exploration and production in the United States and Canada.

Dominion manages its daily operations through three primary operating segments: Dominion Energy, Dominion Delivery and Dominion Exploration & Production. In addition, Dominion also reports its corporate and other operations as a segment. Assets remain wholly owned by the legal subsidiaries. See Note 18.

The term "Dominion" is used throughout this report and, depending on the context of its use, may represent any of the following: the legal entity, Dominion Resources, Inc., one of Dominion Resources, Inc.'s consolidated subsidiaries or the entirety of Dominion Resources, Inc. and its consolidated subsidiaries.

In the opinion of Dominion's management, the accompanying unaudited Consolidated Financial Statements contain all adjustments, including normal recurring accruals, necessary to present fairly Dominion's financial position as of June 30, 2003, its results of operations for the three and six months and cash flows for the six months ended June 30, 2003 and 2002.

The accompanying unaudited Consolidated Financial Statements represent Dominion's accounts after the elimination of intercompany transactions. Dominion follows the equity method of accounting for investments with less than or equal to a 50 percent interest in partnerships and corporate joint ventures when Dominion is able to significantly influence the financial and operating policies of the investee. For all other investments, the cost method is applied.

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The accompanying unaudited Consolidated Financial Statements reflect certain estimates and assumptions made by management in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from those estimates.

Dominion reports certain contracts and instruments at fair value in accordance with generally accepted accounting principles. Market pricing and indicative price information from external sources are used to measure fair value when available. In the absence of this information, Dominion estimates fair value based on near-term and historical price information and statistical methods. For individual contracts, the use of differing assumptions could have a material effect on the contract's estimated fair value. See Note 2 to the Consolidated Financial Statements for the year ended December 31, 2002 for a more detailed discussion of Dominion's estimation techniques.

The results of operations for the interim periods are not necessarily indicative of the results expected for the full year. Information for quarterly periods is affected by seasonal variations in sales, rate changes, timing of recovery of electric fuel, purchased energy and purchased gas expenses and other factors.

Certain amounts in the 2002 Consolidated Financial Statements have been reclassified to conform to the 2003 presentation.

In 2002, Dominion extended the estimated useful lives of most of its fossil fuel stations and electric transmission and distribution property based on depreciation studies that indicated longer lives were appropriate. These changes in estimated useful lives reduced depreciation expense by approximately $9 million and $26 million for the three and six months ended June 30, 2003, respectively.

In 2001, Dominion extended the estimated useful lives of its nuclear facilities by 20 years. The impact of the change is fully reflected in depreciation expense for 2003 and 2002. Dominion filed applications with the Nuclear Regulatory Commission (NRC) for 20-year life-extensions for its nuclear units used for utility operations in 2001 and received a renewed license for these units in March 2003. Dominion has also performed an internal assessment on the probability of a successful license renewal application for both of its operating Millstone units. Based on this assessment and other factors, Dominion has initiated preparations to apply for a 20-year extension of the licenses for both of its operating Millstone units. Dominion expects to file a completed application based on NRC guidelines in 2004.

The following table illustrates the pro forma effect on net income and earnings per share if Dominion had applied the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation , to stock-based employee compensation:

See Notes 2 and 24 to the Consolidated Financial Statements for the year ended December 31, 2002 for a discussion of Dominion's stock plans and information on stock award activity for 2002.

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Note 3.     Accounting Changes

Effective January 1, 2003, Dominion adopted SFAS No. 143 , Accounting for Asset Retirement Obligations , which provides accounting requirements for the recognition and measurement of liabilities associated with the retirement of tangible long-lived assets. Dominion has identified certain asset retirement obligations that are subject to the standard. These obligations are primarily associated with the decommissioning of its nuclear generation facilities, abandoning certain natural gas pipelines and dismantling and removing gas and oil wells and platforms. In addition, Dominion also has identified asset retirement obligations related to the removal of equipment at and the closure of approximately 2,300 gas storage wells associated with the Company's underground natural gas storage network. However, due to the indeterminate timing for future asset retirement activities related to these gas storage wells, the fair value of such asset retirement obligations cannot be reasonably estimated and thus is not reflected in Dominion's Consolidated Financial Statements.

Under SFAS No. 143, asset retirement obligations will be recognized at fair value as incurred and capitalized as part of the cost of the related tangible long-lived assets. Under the present value approach used to estimate the fair value of asset retirement obligations, accretion of the liabilities due to the passage of time will be recognized as an operating expense. In addition, the reporting of realized and unrealized earnings of external trusts available for funding decommissioning activities at Dominion's utility nuclear plants will be recorded in other income and other comprehensive income, as appropriate. Through 2002, Dominion recorded these trusts' earnings in other income with an offsetting charge to expense, also recorded in other income, for the accretion of the decommissioning liability.

The effect of adopting SFAS No. 143 for the three and six months ended June 30, 2003, as compared to an estimate of net income reflecting the continuation of former accounting policies, was to increase net income by $5 million and $191 million for those periods, respectively. The increase reflects lower expenses under SFAS No. 143 compared to expenses that would have been recorded under the former accounting policies. The $189 million increase for the six months ended June 30, 2003 is comprised of a $180 million after-tax gain, representing the cumulative effect of a change in accounting principle, described below, and an increase in income before the cumulative effect of a change in accounting principle of $11 million. Under Dominion's accounting policy prior to the adoption of SFAS No. 143, $1.6 billion had previously been accrued for future asset removal costs, primarily related to future nuclear decommissioning. Such amounts are included in the accumulated provision for depreciation, depletion and amortization as of December 31, 2002. With the adoption of SFAS No. 143, Dominion calculated its asset retirement obligations to be $1.5 billion. In recording the cumulative effect of the accounting change, Dominion recognized its asset retirement obligations in noncurrent liabilities and reversed the previously recorded amount from the accumulated provision for depreciation, depletion and amortization. The cumulative effect of the accounting change also reflected a $350 million increase in property, plant and equipment for capitalized asset retirement costs and a $90 million increase in the accumulated provision for depreciation, depletion and amortization, representing the depreciation of such costs through December 31, 2002.

See Notes 2 and 16 to the Consolidated Financial Statements for the year ended December 31, 2002 for further discussion of Dominion's former accounting and reporting policies for its costs of removal, including nuclear decommissioning, and earnings on its decommissioning trusts. See also Note 13 to these Consolidated Financial Statements for additional disclosures regarding asset retirement obligations.

In October 2002, the Emerging Issues Task Force (EITF) reached consensus on EITF Issue No. 02-3, Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities . EITF 02-3, in part, rescinded EITF Issue No. 98-10, Accounting for Contracts Involved in Energy Trading and Risk Management Activities . As a result, certain energy-related commodity contracts that are held in connection with Dominion's energy trading activities are no longer subject to fair value accounting. The affected contracts are those energy-related contracts that are not considered to be derivatives under SFAS No. 133 , Accounting for Derivative Instruments and Hedging Activities. Under EITF 98-10 accounting, the fair value of energy contracts was measured at each reporting date, with changes in fair value, including unrealized amounts, reported in earnings. Energy-related contracts affected by the rescission of EITF 98-10 are now subject to accrual accounting and recognized as revenue or expense at the time of contract performance, settlement or termination.

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The EITF 98-10 rescission was effective for non-derivative energy-related contracts initiated after October 25, 2002. For those non-derivative energy-related contracts initiated prior to October 25, 2002 in connection with Dominion's energy trading activities, Dominion reported the cumulative effect of this change in accounting principle as of January 1, 2003, resulting in an after-tax loss of $67 million.

As described in Note 4 to the Consolidated Financial Statements for the year ended December 31, 2002, in January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46). FIN 46 addresses consolidation by business enterprises of entities that are not controllable through voting interests or in which the equity investors do not bear the residual economic risks and rewards. A description of Dominion's involvement with variable interest entities and the expected impact of adopting the provisions of FIN 46 follows:

Leases with Special Purpose Entities

Dominion, through certain subsidiaries, has entered into agreements with variable interest entities in order to finance and lease several new power generation projects, as well as its corporate headquarters and aircraft. Under existing accounting guidance, neither the project assets nor related debt are currently reported on Dominion's Consolidated Balance Sheets. See Note 14 to these Consolidated Financial Statements as well as Notes 4 and 27 to the Consolidated Financial Statements for the year ended December 31, 2002, for further discussion of these leasing arrangements.

Effective July 1, 2003, Dominion will consolidate the variable interest lessor entities for which it has been determined to be the primary beneficiary under FIN 46. Consolidation of the variable interest entities will result in an additional $657 million in net property, plant and equipment and $688 million of related debt.

In June 2003, for one of the power generation projects under construction, Dominion entered into a new arrangement with a non-affiliated voting interest entity. The voting interest entity will not be consolidated by Dominion.

Also in June 2003, due to events that occurred in the second quarter of 2003, Dominion began consolidating a special purpose lessor entity that is constructing and financing a power generation project at Virginia Power's Possum Point power station under existing accounting guidance. As a result, Dominion added approximately $352 million of construction-work-in-progress plant assets and related debt to its Consolidated Balance Sheets at June 30, 2003.

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As described more fully in Note 22 to the Consolidated Financial Statements for the year ended December 31, 2002, Dominion established five capital trusts that sold trust preferred securities to third party investors. Dominion received the proceeds from the sale of the trust preferred securities in exchange for various junior subordinated debt instruments issued by Dominion to be held by the trusts. Under existing accounting guidance, Dominion consolidates the trusts in the preparation of its Consolidated Financial Statements because it has a majority voting interest in each of the trusts. Under FIN 46, the trusts are considered variable interest entities. Based on the trust structures as of July 1, 2003, Dominion is not considered the primary beneficiary of the trusts and thus will cease consolidating the trusts beginning on July 1, 2003. Under these circumstances, Dominion's Consolidated Balance Sheets will no longer reflect the trust preferred securities; but instead will report the junior subordinated instruments held by the trusts as long-term debt. Dominion is currently evaluating changes to the trust structure that, if implemented, could possibly result in a determination that Dominion is the primary beneficiary of the trusts, thus requiring Dominion to resume the consolidation of the trusts in the preparation of its Consolidated Financial Statements. If the trusts were to be consolidated in periods subsequent to July 1, 2003, the trust preferred securities would be presented as liabilities as described under the Liabilities and Equity Classification section below.

Other

As a result of transactions that occurred during the first quarter of 2003, Dominion began consolidating in that period its interests in two variable interest entities, Dominion Fiber Ventures, LLC (DFV) and a Dominion Capital subsidiary, that were previously discussed in Note 4 to the Consolidated Financial Statements for the year ended December 31, 2002. See Note 16 for further information regarding Dominion's consolidation of DFV.

Impact of Adoption

Dominion will record an after-tax charge to net income of approximately $19 million in the third quarter of 2003 for the initial adoption of FIN 46. This adjustment will be recognized on July 1, 2003 as the cumulative effect of a change in accounting principle.

In May 2003, FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity . The standard requires an issuer to classify and measure certain freestanding financial instruments with characteristics of both liabilities and equity as a liability if that financial instrument embodies an obligation requiring the issuer to redeem the financial instruments by transferring its assets. Under this standard, trust preferred securities would be reported as liabilities. However, as described under the Consolidation of Variable Interest Entities section above, the consolidation of the underlying trusts must first be evaluated under FIN 46 before application of this Statement. Dominion has not completed its evaluation of the impact, if any, that SFAS No. 150 may have on its other financial instruments.

On April 30, 2003, FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities . SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments and for hedging activities under SFAS No. 133. The amendment reflects decisions made by FASB and the Derivatives Implementation Group (DIG) process in connection with issues raised about the application of SFAS No. 133. Generally, the provisions of SFAS No. 149 will be applied prospectively for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. SFAS No. 149 provisions that resulted from the DIG process that became effective in quarters beginning before June 15, 2003 will continue to be applied based upon their original effective dates. Dominion is evaluating the potential impact of SFAS No. 149 on its results of operations and financial position.

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In connection with the January 2003 EITF meeting, FASB was requested to reconsider an interpretation of SFAS No. 133. The interpretation, which is contained in the DIG's C11 guidance, relates to contracts with pricing terms that include broad market indices. In particular, that guidance discusses whether a contract's pricing terms that contain broad market indices (e.g., consumer price index) could qualify as a normal purchase or sale and therefore not be subject to fair value accounting. Dominion has certain power purchase and sale contracts subject to this guidance. On June 25, 2003, FASB issued Statement 133 Implementation Issue No. C20, Interpretation of the Meaning of 'Not Clearly and Closely Related' in Paragraph 10(b) regarding Contracts with a Price Adjustment Feature , to clarify the guidance applicable to these circumstances. Under C20, criteria are established to determine if the price adjustment is not clearly and closely related to the underlying asset being purchased or sold under the contract, including whether the price adjustment is extraneous or disproportionate to the fair value of the underlying asset or direct component thereof. Under C20, the assessment should include both qualitative and quantitative considerations and should be performed only at inception of the contract. The provisions of C20 should be applied prospectively for all new and existing contracts beginning the first fiscal quarter after July 10, 2003. Dominion has several power contracts that are subject to this guidance but has not completed its assessment of whether those contracts meet the provisions of C20. Assuming such contracts qualify as normal purchase or sale contracts under the new guidance, Dominion will record these power contracts at estimated fair value, determined at the time of implementing C20, and will report the change as the cumulative effect of a change in accounting principle.

EITF 01-8

In May 2003, the EITF reached a consensus on Issue No. 01-8, Determining Whether an Arrangement Contains a Lease (EITF 01-8). Under the provisions of EITF 01-8, arrangements conveying the right to control the use of specific property, plant or equipment must be evaluated to determine whether they contain a lease. Dominion enters into contracts for the long-term purchase and sale of electric generation capacity and energy that, depending on the facts and circumstances, could be subject to EITF 01-8. The new rules will be applied prospectively to contracts entered into or modified after July 1, 2003.

Balance Sheet Classification - Mineral Rights

As described in Note 18 to Consolidated Financial Statements for the year ended December 31, 2002, Dominion adopted SFAS No. 142, Goodwill and Other Intangible Assets , on January 1, 2002. SFAS No. 142 provides accounting and reporting requirements for goodwill and other intangible assets, including initial recognition and measurement, amortization and review for and measurement of impairment. In addition, accounting guidance regarding the identification, initial recognition and measurement of goodwill and other intangible assets arising from business combinations is contained in SFAS No. 141, Business Combinations , which generally became effective for Dominion on July 1, 2001. These new standards emphasize a more precise evaluation of intangible assets than required under previous accounting rules, with the intended result being more assets classified as intangible assets rather than as goodwill or tangible assets. Upon adoption of these new standards, Dominion identified and separately classified on its Consolidated Balance Sheets, intangible assets, other than goodwill, consisting primarily of software and software licenses.

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The composition of revenue from nonregulated electric sales, nonregulated gas sales and other revenue has changed since being described in Note 7 to the Consolidated Financial Statements for the year ended December 31, 2002. The changes were effective January 1, 2003 and related to the impact of adopting EITF 02-3 on the reporting of revenue and expenses for energy trading activities, as described in Note 3 and as follows:

For derivative contracts previously presented in revenue on a net basis : For non-trading derivatives not designated as hedges, all unrealized changes in fair value are presented in other operations and maintenance expense on a net basis. For non-trading derivative contracts that involve physical delivery of commodities, gross sales contract settlements are presented in revenue for nonregulated electric sales, nonregulated gas sales and other revenue, as applicable, while gross purchase contract settlements are reported in expenses.

For non-derivative contracts previously presented in revenue on a net basis: Non-derivative energy-related contracts, previously subject to fair value accounting under EITF 98-10, are now subject to accrual accounting. Revenue for nonregulated electric sales, nonregulated gas sales and other revenue now include settlements of sales contracts at the time of contract performance, settlement or termination, on an accrual basis. These contracts will no longer be reported at fair value in Dominion's Consolidated Financial Statements.

Dominion recognized costs and related liabilities associated with employee severances and the abandonment of leased office space no longer needed in 2001. The change in these liabilities during the six months ended June 30, 2003 is presented below:

For additional information, see Note 8 to the Consolidated Financial Statements for the year ended December 31, 2002.

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